Such Is Life In A Housing Market Gone Stagnant
The Beacon Journal reports from Ohio. “A three-year slide in the sales of existing homes in the Akron area accelerated dramatically last year, with 20 percent less money changing hands in 2007 than in the recent peak of 2004, according to the Akron Area Board of Realtors. ‘The housing market did well in 2003 and 2004. They were good years for us,’ said Marc Hustek of a Realty One office on Graham Road in Summit County. ‘Has this area been affected by the downturn in the market? Yes.’”
“‘The real estate and housing market will face challenges this year and we will have to do everything right,’ said Jim Camp of Cutler Real Estate. ‘Sellers have to be more careful in pricing their homes and keeping them in condition and we have to make sure we market the homes properly because of the huge influx of homes on the market.’”
“Camp had another explanation for the market’s behavior.”
“‘Some homeowners were using their home-equity loans like ATM machines,’ he said. ‘Say a home was purchased for $170,000 and was appraised for $200,000 and now we’re telling them their home is only worth $175,000. They feel they can’t move because they don’t want to lose money.’”
The Toledo Blade from Ohio. “Whacked by speculators, job losses, and other troubles, the northwest Ohio housing market generally staggered to higher levels of foreclosure activity last year.”
“Hardest hit among nine Ohio metro areas was Lima, where foreclosures increased 499 percent last year from 2006, according to RealtyTrac.”
“Among counties in northwest Ohio and southeast Michigan, Putnam had the largest jump, at 878 percent. Allen County was next, at 499, and then Williams County at 271 percent, the report said. Williams had the biggest jump among 16 counties from 2005, up 666 percent.”
“Mike Sheeran, a broker in Bryan, said the 130 filings last year in Williams County was tied to subprime lending. ‘I think … some of these people were going out and getting financing with no money down and the sellers paying closing costs, with a variable rate mortgage. The rates went up and they were out.’”
“In Lima, Larry Vandemark, owner of Prudential Vandemark Realty & Associates, said, ‘In 2006, our area was rated as most affordable in the United States. Right afterwards, we had a lot out-of-state investors come into the area and calling, asking if we knew of available properties.’”
“Many defaulted when adjustable mortgage rates rose and they couldn’t refinance, he said.”
“Mr. Sheeran in Bryan said, ‘This whole situation damaged our market. It brought down the prices of existing homes and you’ve got potential buyers for medium-priced homes that aren’t there any more because they can’t sell their existing homes.’”
The Detroit Free Press from Michigan. “The days of zero-down mortgages, which helped to fuel the real estate boom, are coming to an end in Michigan. The change means thousands of ‘for sale’ signs in metro Detroit aren’t going to disappear anytime soon as tougher loan qualification requirements reduce the pool of potential buyers, leading to further erosion of home prices.”
“Kelly and Nicole Shannon had to rush to close on their three-bedroom Westland home, but they made it just under the wire to get a mortgage without a down payment.”
“Kelly said he and his wife had been renting a townhouse for three years. The huge array of homes at falling prices was motivation. ‘It was like a candy store, and we could pick out anything we wanted,’ he said.”
“The Shannons ended up getting their first home in Westland for $34,000 off the original listing price of $162,900. They were set to close Feb. 15 on their 1,190-square-foot house across the street from an elementary school. But their broker at Citizens First Mortgage called last week and said if they didn’t close by Jan. 31, they would lose the zero-down option.”
“The rush to close on zero-down deals is the result of a letter that mortgage backer Fannie Mae sent to lenders in December reiterating its rule that requires a minimum 5% down payment on homes sold in declining markets.”
“‘Lenders got pretty loose with their money in the past couple of years. They are retightening their standards,’ said John Mechem, spokesman for the Mortgage Bankers Association. ‘No down … is going to be a very difficult loan to obtain in the future, if it ever comes back.’”
“‘We are missing an opportunity to slow down the depreciation we are facing. You have a lot of people who would buy right now because the prices are declining,’ said Drew Sygit, a certified mortgage and equity planner in Bloomfield Hills. ‘They know it’s a great time to buy, but they don’t have the money.’”
The Sun Times from Illinois. “Associations are beginning to feel some pain over fallout from the subprime mortgage debacle.”
“‘Foreclosures are a problem for some of our client associations,’ said David Sugar of the Chicago law firm of Arnstein & Lehr. ‘Newer associations and associations with many first-time buyers have been hardest hit because so many of their unit owners purchased their units with little or no money down and now have little or no equity in their units.’”
“With small to nonexistent financial stakes, they simply choose to let their loans go to foreclosure, he said.”
“Jordan Shifrin, a principal in the Buffalo Grove legal firm of Kovitz Shifrin & Nesbit, would not describe the situation as a crisis. Not yet, that is. ‘There are looming crises that haven’t blossomed yet,’ he said. ‘It’s still too early to tell.’”
“Shifrin places a good part of the problem at the feet of property-flippers, especially in Chicago. ‘A large number of units were purchased by investors with no money down, intent on selling for a profit before or just after they closed,’ he said. Now they can’t find buyers because the market has softened.”
“At the same time, the rental market has a surplus of vacant units, so leasing is not a promising option.”
“‘Some of these subprime purchasers will walk away from their properties and their loans and leave associations with big deficits until the lender takes them back and starts paying assessments,’ Shifrin said.”
“But, again, these are circumstances that have not reached their most serious point. ‘This is forecast for the next six to 18 months,’ he said.”
“Evidence of the growing number of foreclosures hitting associations was provided by Stacey Johnson, executive VP of E.L. Johnson Investigations in Chicago. Thirteen years ago, the firm began to specialize in the foreclosure process service for lawyers employed by mortgage companies to go after nonpaying borrowers.”
“‘In the last few months, our volume has at least tripled from last year,’ said Johnson. At least 30 percent of the homeowners to whom they serve notices are condominium residents.”
The Sauk Prairie Eagle from Wisconsin. “South Central Wisconsin Realtor’s Association Executive Vice President John Deininger, said the local real estate situation has not followed the greater national trends. Deininger said that home prices in south central Wisconsin have not increased as much as in past years, but still were up 1 1/2 percent through November.”
“‘Was there a housing bubble? In certain markets there was — areas where prices were doubling every couple of years had a real problem,’ he said. ‘In Wisconsin, prices have risen at a moderate rate.’”
“The perceived problem by homeowners struggling to sell their property is the result not of a decrease in home sales, but that of a significant increase in homes on the market, Deininger said.”
“‘In 2005, sellers had to beat them back with a stick there were so many buyers,’ he said. ‘The buyers are still there, the sellers are just competing against a lot more properties.’”
The Wisconsin State Journal. “The second phase of Downtown Madison ’s largest private housing project is in default to the tune of more than $26 million, its lenders said in court documents that seek foreclosure of its three mortgages.”
“The fate of the newly completed Metropolitan Place II, a 164-unit condominium tower, could indicate that national housing trends are reaching Madison, thought by some to be more immune than most places to twists and turns in U.S. economy.”
“‘This shows that the national foreclosure crisis has hit Downtown Madison for the first time in any meaningful way,’ said Ald. Mike Verveer, whose 4th District contains Metropolitan Place II.”
“Construction of several ambitious condo projects and conversions of apartments to condominiums in recent years have flooded the market, developers and the real estate industry say.”
“‘There ’s certainly a significant inventory that will have to be absorbed,’ said John Deininger, executive VP of the Realtors Association of South Central Wisconsin. ‘I anticipate we ‘ll see fewer (condo) projects come to the drawing board.’”
“On the East Side, Todd McGrath has delayed construction of his mixed-use Union Corners project, and at the Capitol West Downtown and Hilldale on the West Side, developers have revised later phases from condo towers to hotels.”
“Developer Cliff Fisher ’s attorney, Tim Homar, said Fisher will oppose any move to put the project into receivership. Without receivership, he said, Fisher could continue to sell units and make his payments. But under receivership, Homar said, the banks could sell off condos at ‘bargain basement prices.’”
The Capital Times from Wisconsin. “Knowing they’d be moving into a new house in the fall, Al and Aly Wendorf put their home up for sale last February. ‘We were thinking that would give us more than enough time to get it sold,’ said Al Wendorf, who works in the construction industry and had been through the process five times before.”
“Since then, they’ve been through two Realtors and dropped their asking price from $324,900 to $294,900 without receiving a single offer on the eight-year-old, 2,600-square-foot home on the southwest side.”
“And they’ve been paying for both homes since September. ‘It’s not fun,’ Wendorf said with a wry chuckle. ‘You’re working your tail off to pay two mortgages, and you have nothing to show for it.’”
“Such is life in a housing market gone stagnant: After a long boom that peaked in 2005, sales of homes and condominiums in Dane County fell 10.4 percent in 2006 and another 6.3 percent last year to their lowest level since 2002.”
“Wendorf doesn’t feel the market ‘tanked’ until last summer and believes that if they had initially listed the home at $294,900 it would have sold. They took the home off the market last month to have it painted and the carpets professionally cleaned and plan to put it back on the market this month as a FSBO (for sale by owner) at $273,000.”
“‘I won’t have to pay commission, so we can lower the price,’ said Wendorf, who has used FSBO for three of his five previous home sales. ‘I think price is driving this market more than anything else. Everyone has the mind-set that there are bargains out there, and everyone is thinking price, price, price.’”
“Although the Wendorfs’ house is out of Nick and Liz Schultz’s price range, that sentiment is music to the ears of the couple, who have been trying to buy a house for about a year.”
“The Schultzes, who rent a house in the town of Primrose and have no pressure to move, have grown frustrated with what they see as unreasonably priced homes for sale in their $200,000 price range.”
“‘It’s just crazy,’ Nick Schultz said. ‘People have been used to this bubble around here for so long…they still think you can buy a house and two years later sell it and make $50,000 on it even though the market is terrible.’”
The Hastings Star Gazette from Minnesota. “In 2003, Hastings’ biggest year of growth in recent history, almost 150 single-family homes, and more than 200 townhome units, were built in the city. In 2007, however, those numbers were down to nine and 54, respectively.”
“The slowdown in residential construction in Hastings is part of a national trend, Hastings Planning Director John Hinzman said.”
“Just nine single-family homes being built in one year is at least a 17-year-low for Hastings, according to Hinzman. Before 1990, the city doesn’t have good records on residential development statistics, Hinzman said.”
“Hinzman said between 2000 and 2003 the city annexed a good amount of land, and residential development began quickly in those areas. The Century South neighborhood in south Hastings simply wasn’t there in 2000.”
“It was originally thought it would take five to eight years to build out Century South, but between 2001 and 2003, sales were good, so homes were continually being built. The development was finished in about half the time it was originally thought it would take.”
“Also during those three years, average housing prices jumped from about $154,000 (in 2000) to more than $222,000 (in 2003), according to numbers from the Regional MLS of Minnesota. Yearly growth averaged almost $23,000, or 11 percent.”
“Shelly Kidd, a realtor in Hastings, said 10 to 15 percent yearly increases in average sales prices are not normal. She said they rose so quickly because there was rising demand in the city, as more people moved here.”
“‘People were willing to pay more for properties,’ Kidd said.”
“Lance Twedt, a realtor with Midwest Realty, said growth rates like the city saw from 2000 to 2003 simply cannot be sustained over a long period of time and that the ‘correction’ that’s occurring now is healthy.”
“Twedt said when the large build-out of townhomes was occurring in the early 2000s, trends were saying that retiring baby boomers wanted to move out of their single-family homes and into townhomes and condos.”
“At the time it seemed like a sure bet, but in retrospect, Twedt said, Hastings may have over-built townhomes.”
“The large supply of townhomes today has driven prices down, Twedt said. Today sellers trying to put their townhomes on the market for what they paid for them six or eight years ago aren’t finding much success because the market simply won’t allow for it, Twedt said.”
It’s interesting to continually find references to recent booms, out-of-state specualtors, housing ATMs, ‘beating buyers off with sticks,’ etc, in these so-called non-bubble areas.
I grew up near Madison and live in Chicago now. A couple years back I considered moving to Madison, only to find I could only get a 2 or 3 bedroom condo in one of the many new highrises for the same price that I would get for my 4 BR house on the north side of Chicago. Anyone who thought Madison was different, or was not experiencing a bubble, did not look outside at all those cranes. Also, the property taxes (and all taxes) are incredible. One 350K listing had taxes of 12K. I wouln’t even have rented the place for $1k/mo, not to mention paying 350K.
When 60 Minutes was on last week, and the story centered on Stockton, with only a few glimpses of other stinky areas, it gives the average viewer an idea that it’s just in this one area, vs. giving you an idea of the magnitude of this, the Ultimate Bubble.
Gambling went on in all 50 States (including you too, Utah & Hawaii)
Whitehorse, Yukon Territory, Canada also appears to have a bubble.
http://tinyurl.com/2d3jy5
We should have a challenge on this blog to see who can find the most remote place on that is in housing bubble heaven.
Cinch
My friend pays $540 rent on a $150k 2/1 shack in Saskatchewen, Canada. He says he wouldn’t buy that shack for even $50k
How about Bulgaria?
http://www.novinite.com/view_news.php?id=90215
Hugh Fraser, of Sofia-based LS Property, said: “Our research suggests that only about 30 apartments were sold in Bansko last month and the buyers were Russians and Greeks.” This compares with sales two years ago of more than 500 properties a month to UK and Irish buyers.
Such a steep decline suggests Bulgaria’s holiday home boom, which has focused on Bansko and Sunny Beach, the leading resort on the Black Sea coast, may be over.
Property developers have been offering discounts of 8-12 per cent in buildings nearing completion in Bansko. Meanwhile, prices for new apartments in Sunny Beach have fallen by 7-8 per cent.
“Attitudes have changed. With house prices stagnating, it is much harder for UK customers to release equity to buy a second home,” said Rossen Dimov, managing director of Rockarch Estates, a London-based agency selling Bulgarian properties.
Mihail Chobanov, chief executive of Bulgarian Properties, one of the country’s biggest estate agencies, believes that about 50 per cent of UK investors who took a punt on the Bulgarian market four years ago are now trying to sell their properties. “Speculative buyers want to cash out and move on,” he said.
Nobody ever gives Bulgaria, it’s due.
I’ve said it before and I will say it again. Minnesota was in a bubble since at least 1998. Subprime lending ran rampant. House prices went up throughout the state, for no apparent reason other than easy lending.
The Hastings article is sad. Hastings is such a nice old town. It was known for farmland and a nice, old fashioned downtown area. It has been overdeveloped and much of the charm goes away with that development. I haven’t been there in years. I hope it still has its charm.
The mania was everywhere.
Does middle America not have $6,500 for a down payment, on a house?
“The Shannons ended up getting their first home in Westland for $34,000 off the original listing price of $162,900. They were set to close Feb. 15 on their 1,190-square-foot house across the street from an elementary school. But their broker at Citizens First Mortgage called last week and said if they didn’t close by Jan. 31, they would lose the zero-down option.”
“The rush to close on zero-down deals is the result of a letter that mortgage backer Fannie Mae sent to lenders in December reiterating its rule that requires a minimum 5% down payment on homes sold in declining markets.”
Very few of the people I know who don’t already own a house have $6,000.
We really area vast cash Potemkin Village, nice facade though.
Uh, does that make cash sort of like king?
You win, King.
Quite a few of the people I know who DO own a house, couldn’t come up with $2500 cash, not borrowed, if their life depended on it.
I know a few people like that, who drive his and hers 40K+ cars.
I agree with Midwesterner, especially as a former Midwesterner. The Midwestern values have kind of slid down over the years. Being thrifty and saving was so old fashioned. I bet it would be difficult to find people that could come up with $5,000 within a week. I’m not talking credit cards.
Just think if we go to 10% down payments. We are talking about $15,000 at a minimum in lesser areas and $50,000 or more in coastal areas. No freaking way!
You can tell who are the long term Coloradans vs. the new comers. Those who have been here a while understand the boom and bust cycle of the state economy and tend to be thrifty. The new comers spend and spend. They buy everything no money down and have all the new toys.
I call bullshit. Most of the FBs among my acquaintances and neighbors are native or long-term Coloradans. They’re no more financially saavy than the newcomers, and most are far deeper into denial, and willing to buy into the “it’s different here” mantra, than more recent arrivals.
You must run in with a different crowd. I will refrain from reciprocating the BS accusation. The long term people I know here in Loveland tend to be frugal. I won’t say that the are “financially savvy”, as I reserve that description for people who get rich.
Yes, it’s BS. There is a “Colorado Native” movement here and this reminds me of it.
so true ben
everyone i hear now is desperate to get out from under from their mortgage and be free of the house
why would i want to take their place
renting is really the new black
home moaners
Frankly, I’m surprised they even got a zero down deal.
Note that Fannie is “reiterating” the declining market rule. It’s actually been in effect around here since last spring or so.
Perhaps they had a great credit score. And as Ben said, I know very few right now around here who could put $6500 toward a house.
my wife and i far from rich
but it is reassuring knowing god-forbid things get really
bad we can survive
$6500 for a dp?
i keep a really low profile i want people
to think we are struggling
they won’t ask to borrow
how long before some us here get hit up
by foolish family members and friends asking
for a loan? i know a few here have already
i won’t give you a loan but i will sit down with you
and help you set up a budget
when i was a low point in my life i worked hard and
dug myself out of it and so should others
if it does not kill you it will make you stronger
“Loans” to family members that never get paid back. BT, DT.
Looking back, I see where I erred. I thought that since they are screaming, yelling holly rollers then they would never do the un-Christian thing of stealing. But I was wrong.
Just as I would not want to be a borrower, I would not want to be a lender. The doors to my bank (Fifth Third of the Last) are no closed permanently.
If you are ever asked for a loan you have to ask yourself “am I willing and able to gift them this money?” My answer is no.
are no closed = are now closed
when i was a low point in my life i worked hard and
dug myself out of it and so should others
AMEN.. Before I evacuated NYC, I spent between 12 and 14 months unemployed and another 12-18 months underemployed between 2001 and 2006.
Boy, that sure reorients your whole way of thinking.
OTOH, it did mean that I didn’t buy into the fake housing boom, though from what I’m reading now I probably could have..
I mean, I still like toys, but only for cash. Only have a single CC to rent vehicles and reserve hotel rooms..
But, still getting the ol’ house in order, one check at a time :p
In 1986 I hit rock bottom. No job, credit card debt, student loan debt, went from two part times to one, riding on bald tires, etc…
I dug myself out.
Now I am self employed. Sustain myself with long term cap gains. Seven figures net worth. Did it all by myself.
My secret: All it takes is a very generous application of common sense. Never has been rocket science, and never will be.
You also have to be willing to do an objective and honest self-assessment and do what needs to be done. You apparently did so successfully.
I didn’t have much choice, getting beaten down by reality for awhile does that :p
I though I had my s–t together, 6 months savings, etc.. But the first stint out of work (3 months) was scary, and I did the best I could to gear down over time (finding lower-cost apartments, getting rid of the leased car, cooking for myself, etc) in order to reduce the “empty calorie” spending that’s so easy to do in NYC.
I think the biggest thing for me was to leave NY. I was born and raised in that state, went to school there, never lived anywhere else, but realistically there was only work in my field within the highest-cost part of the state (Tri-state area), and salaries and opportunities were stagnant or declining. I got a chance to relocate to a much lower-cost and lower-tax area and I took it. It’s definitely an adventure…
(and frankly, I don’t even have it all that bad. Sure, I still have some debt to work down (had to choose between rent, food and CCs for a few months there, and CCs would usually lose), but there’s an awful lot of folks who had/have it worse than me, and have turned it around better..)
I was surprised that Fannie did 100% financing anywhere, ever. Was this an 80-20? Article wasn’t clear. I really hadn’t realized that 100% (or 80-20) was still possible anywhere since late 2007. But to do a no skin in the game loan in Metro Detroit in 2008 - sheer lunacy.
Ill have $7k down on a $35k house in NW PA when I move in May or June. That’s more money saved than most of the sheeple that are to their eyeballs in debt. I am in the black
They can still get zero down. Fannie might not do zero-down in Detroit anymore, but FHA still does, and all but the highest end properties in Detroit metro qualify for FHA.
Oh my the end of 0% down mortgages. How inhumane is that the banks are just getting out of control.
Making you prove your income.
Wanting a down payment.
Not letting you do neg am, and interest only anymore.
HELOCs only to 70%.
Who would want a house now?
I helped a friend of mine deliver firewood to a home moaner in Bowling Green, KY. When I moved out of BG three years ago bank buildings where sprouting all over the place like mushrooms. But now, in just the past three years, there are even MORE bank buildings. Banks from other counties now have a presence in BG.
This can not end in a good way for all of these banks. Their lending will be greatly reduced. Lots and lots of MT bank buildings in South Central KY soon, and in other “non-bubbly” areas like SC Wisconsin also.
My grandfather said that before the depression, if you dropped a nickel on the ground they’d build a bank on it. Definitely seems to be the case again.
‘They know it’s a great time to buy, but they don’t have the money.’”
The Horror! I’d like some groceries, but I don’t have the money, so give them to me anyway…. Guess we need a Soup Kitchen which ladles out Houses.
“It’s just crazy,’ Nick Schultz said. ‘People have been used to this bubble around here for so long…they still think you can buy a house and two years later sell it and make $50,000 on it even though the market is terrible.’”
Ah, that’s nothing - I saw one yesterday around here that was purchased in October 2007 for 321k. Now for sale (less than 5 months later) for 449k! Higher than anything else in the neighborhood currently. Higher than anything in that neighborhood during the peak. (These are townhomes built in the 1960’s). Sale history is:
10/02/2007: $321,000
06/27/2007: $272,000
08/06/1981: $102,130
and tax-assessed value is $295,080.
Even the “zestimate”, which lags the market going up or down, has this thing around 80k less than the asking price. Well, I guess it’s worth it since it’s been “completely remodeled” (in four months)? with granite/stainless/cherrywood.
I considered writing the listing agent to ask why he would take such a ridiculously overpriced listing that would not sell. Then, I saw the little note “owner/agent”. Sigh…
that should fly off the market
it is really comical at this point
wheres neil? start another batch of popcorn
Ah, that’s nothing - I saw one yesterday around here that was purchased in October 2007 for 321k. Now for sale (less than 5 months later) for 449k! Higher than anything else in the neighborhood currently.
Oh I’ll see you and raise you on the ‘flipper’ game.
Purchased 3/06.
Listed for sale 12/06-1/07
Price reduced and reduced.
Notice of foreclosure auction published last week.
Amount owed on the mortgage? $1,900,000 (yes 7 digits) with 8.875% interest.
Original list price? $3,900,000 (hmmmm…..$2,000,000 or so in less than 10 months?)
Current list price? $2,700,000
Yea the realtor bought his own koolaid and is selling for an insane wishing price. I probably should avoid houses being sold if the owner is also an agent
‘Newer associations and associations with many first-time buyers have been hardest hit because so many of their unit owners purchased their units with little or no money down and now have little or no equity in their units.’
This particular subject is near and dear to me as I’ve posted about it with regards to Chicago condos many times. Not only are there so many new condo buildings in the city - but so many buildings in the neighborhoods are relatively small. Marketed overwhelmingly to first time buyers the associations don’t have the cash or experience to deal with foreclosures.
Many new condo buildings here have only three or four units, and except for the new high rises closer to The Loop and lakefront - just about all have twenty five or less. To afford the bubble prices many of these associations cut their assessements down to the bone. Their relatively new owners cannot absorb a bump in their mortgages or taxes - and the same hold true of their assessments. There’s no way those associations can drum up the cash reserves to carry them through this.
The buyers for $400k units on Southport - or $350k units on Lincoln - or $250k units on Lawrence - or $200k units on Pine Grove - or $150k units on Kenmore are no longer there. Those who could afford to willingly buy at those prices already bought - and there aren’t any more.
Edgewater John: I agree with you. Who is buying the $400,000 condo in Logan Square now? No one.
Heck, even if they’re listed in short sale for $300,000, they’re not selling.
I’m seeing foreclosures pick up in the downtown high rises where flippers bought at least 30% of the units. The foreclosures happening now were for buildings that closed in 2006 so it’s taken nearly 2 years for the bank to take them.
There are so many new high rises closing in Chicago this year, it will take at least a year or two to feel those ramifications.
On an interesting note- the flippers have no idea how bad it is out there. In three of the new buildings that closed in the last year in Lakeshore East (340 On the Park, The Regatta, and The Chandler) from what I can tell, only about 6 units have been successfully flipped.
And those are buildings that collectively have over 100 units currently for re-sale.
6 units in the last 8 months!
How long will the flippers pay the monthly mortgage when selling could be years away?
Stay tuned.
Ben,
If you don’t have the ability to save at least 10% down you shouldn’t buy a house. Your priorities aren’t right yet. Owning is for adults who have some self control. I have the means to buy and pay cash I prefer to rent because its cheaper and you can rent a McMansion for the payment of a dump in Colorado Srings. I am negotiating a lease on a 5500 sqft custom house at 2000 a month. I couldn’t own it for 5000 a month. If I don’t get this one there will be more soon I have till June but would prefer to find something sooner as I am month to month with 2 months notice now.
I agree, but the system has gone crazy. We just went through a period where people making less than $20k per years were loaned $700,000. The public is dumbstruck now, but it will be interesting to see how they view this bubble in a couple of years.
Good rent price for 5500 square feet! Still couldn’t afford it without several roomates. How cheap will this huge house be at the bottom? $250k?
I refi’d my house last week (moved from a 30 year fixed w/22 yrs. left to a 15 yr. fixed). The mortgage guy got kind of excited at the end when the loan was approved, pretty funny.
Sell the house and rent. Do it before you end underwater
Why? I really like the house and don’t care if the amount I could get in a sale goes down, since I plan to stay for a long time. I have a fixed payment that I can afford easily with a relatively secure job (healthcare), and don’t plan on using/needing the equity in the house (if there is any) for anything. I don’t look at the house as “above-water” or “underwater,” just as a house that I like and can afford.
Do you guys remember this?
Oh Yeah!
That really takes me back!
“You have a lot of people who would buy right now because the prices are declining,’ said Drew Sygit, a certified mortgage and equity planner in Bloomfield Hills. ‘They know it’s a great time to buy, but they don’t have the money.’”
Then they can’t afford it.
Stop whining, tighten your belts and save for a couple years. It’s not that hard.
“It’s not that hard.”
For you and me maybe not, but dutiful consumers have a lot of heavy lifting to do with their stagnant wages. There’s plasma, silicone, Botox, dualies, stainless grills, cable, iPods, designer labels, etc. that they need to keep buying…or else.
Watched a Judge Alex episode while riding our exercise bike in the garage (we have it set up with a small TV bought on CraigsList). Anyway, the dispute was over an ex-boyfriend asking for the $4,800 he loaned to his then girlfriend to help her cover living expenses. She lost her job, and in the meantime, shelled out $5,000, borrowed from her ex-husband, for a Boob Job! So, she needed cash from her boyfriend/host to pay for groceries. Wow, what an embarrassment to the female gender. (the judge found in favor of the guy, yeah!) And I have no sympathy for guys who continually hook up with these blood-sucking females. Wanna trophy?, hire a hooker for the evening if you need to show off to your buddies so badly.
No wife for me! No hooker either, don’t need AIDS ridden low life gold diggers! I am willing to be friends with sweet, pure, smart, respectful wo/men.
What exactly is a mortgage and equity planer, and who certifies these people?
“‘They know it’s a great time to buy, but they don’t have the money.’”
Then it isn’t a great time to buy.
A realtwhore vs. Peter Schiff.
http://www.youtube.com/watch?v=5Cg6e-peVXo
That was beautiful (the dialogue, but also the realwhore, albeit she was dead wrong). Peter Schiff rocks! We have Ben Jones, Chris Thornberg, and Peter Schiff and Ron Paul as the men of facts. The mainstream does not want facts. They want fantasy. Funny how Schiff has to prove that he’s right all the time when the masses of realwhores and other cheerleaders are dead wrong.
Just another pointless “Real Estate Expert”. I liked her psycho eyes. How could you take housing advice from somebody that can’t even get the carpet to match the drapes?
Classic! Watching the realtwhore squirm like an insect on a pin and grow increasingly shrill and agitated betrayed her own knowledge that the gig is up - but she’s terrified of J6P becoming aware of that fact. That clip was from Nov 07, and any shred of doubt that Peter was right and the NAR shill was, as usual, dead wrong, will have been fully dispelled by now.
“‘Some homeowners were using their home-equity loans like ATM machines,’ he said. ‘Say a home was purchased for $170,000 and was appraised for $200,000 and now we’re telling them their home is only worth $175,000. They feel they can’t move because they don’t want to lose money.’”
Our culture really needs a paradigm shift. Liquid money needs to be viewed as cash or money in a traditional bank account (CD, savings act, etc..) Home equity is not money. A 401K account is not money. Credit available on a credit card is not money. A high fico score is not money.
The guy whom made this comment seems to think that these sellers have money. It’s probably not true. If these people had to come up with real actual cash, it would probably not happen. They used their house like an ATM machine because they had no other access to cash.
Most people can’t keep even a few hundred dollars in a savings account. Face it folks, a lot of Americans are tapped out.
“Most people can’t keep even a few hundred dollars in a savings account. Face it folks, a lot of Americans are tapped out.”
The SF Chronicle had a huge front-page article today on this very issue, folks being tapped out. The article featured 6 or 7 interviews with a variety of people, home owners & renters, different income levels, different age groups. The one thing they ALL had in common? All of them were watching their pennies, and most claimed they didn’t have the amount in savings they knew they “should have” in a slowing economy.
My favorite was the 30 year-old in SF with $25K in credit card debt.
That 30 year old (Graner is the name in the story) “works as a brand manager for a large financial services company. ”
Sort of confirms my view that I would never entrust monry management to or take financial advice from anyone who drives a Hummer. If they are so stupid as to spend that much money on something that rusts, why would I use them on financial matters?
My sisters don’t have credit cards. They are all older than 50 but are addicted to credit. This is echoed by a lot of baby boomers. They have no self discipline. This is also why I think the boomers are going to surprise the pundits and retire much later than the pundits say - some cases, they won’t retire at all. As a whole, they used real estate instead of 401ks and IRAs as their retirement fund. Stupid, Stupid, Stupid!!!!!
“This is why I think the boomers are going to surprise the pundits and retire much later than the pundits say - some cases, they won’t retire at all.”
Agreed, and these working boomers will help resolve the social security underfunding problem.
Ummm….Bill?
I AM a boomer in the 50ish - 60ish bracket and so is my husband.
aTm
Kinda Pyramiddy looking
A 401K account is not money.
In a way it is. You’ll have to pay taxes and a 10% penalty to access it, but it is very liquid.
Point taken - but until you cash it in - it’s just numbers in an account. It’s a real mistake to borrow against a 401K account or make any brash decisions based on a 401K account balance - which is what happened in the lat 90’s to many people.
They feel they can’t move because they don’t want to lose money.
Er, they’ve already lost the money, when they took out the HELOC and p#ssed it away.
test test. I wrote a long comment that hasn’t appeared. Will this one go through?
“Does middle America not have $6,500 for a down payment, on a house?”
I do. But in my area the house I can afford (annual income*three) I will not take for free. Damit, this is America, the richest nation in the world! I work hard and I deserve a decent house.
Move to NW Pennsylvania
Why? Just to buy a house one can afford? Is that the main thing someone must want? We need food, clothing, love, and shelter, but you can find shelter where there is good climate, lots of culture, lots of high paying jobs, and a lot of universities. You don’t have to own a house to have shelter. Good grief. I imagine NW Pennsylvania is beautiful every day of the year and comfortable 30 days out of the year but gee whiz! It’s as funny as me saying I should buy a house in Midland or OdessaTexas because you get a lot for your money. Think Jobs, culture, education, conveniences.
Hey buddy, don’t worry. It’s the same here in my area. They ran another story today, but it has that theme of it’s different here because of the military or no loss of jobs yet. But in time, things will hopefully correct and hopefully the gov’t will not meddle with things too much.
“‘Some homeowners were using their home-equity loans like ATM machines,’ he said. ‘Say a home was purchased for $170,000 and was appraised for $200,000 and now we’re telling them their home is only worth $175,000. They feel they can’t move because they don’t want to lose money.’”
Why is it so many people don’t understand what “loan” means?
Can’t lose what they never had. Assuming they hadn’t HELOCed the house for that other $30K, the difference between what they paid and what an “appraisal” said, was an illusion. It never really existed except in someone’s imagination. Think “appraiser” who imagined it was worth that much and “owner” who imagined it was really worth that much and that they ‘had’ $30K somewhere in the ozone.
Yes the consumer is tapped out, from bloomberg
Auto dealers are among retailers suffering from the slump in housing and employment. Cars and light trucks sold last month at a 15.2 million annual pace, down 6.7 percent from December. Industry sales this year are forecast to drop to the lowest level since 1998.
The retail sales report may show purchases excluding automobiles climbed 0.2 percent, after a 0.4 percent drop in December, according to the Bloomberg median. An increase in receipts at service stations as gasoline prices rose probably contributed to the gain, economists said.
Falling stock prices and stricter lending rules also caused Americans to curb spending, even as retailers slashed prices by as much as 75 percent last month. Purchases at stores open at least a year rose 0.5 percent from a year earlier, the worst January since 1970, according to the International Council of Shopping Centers.
“…worst January since 1970…”
Think for a moment how much larger the retail scene is today than back then…how many more stores, employees, overhead, and merchandise. How many can hang on through a “L” shaped event?
I grew up not far from Lima, OH. It always amazes me that realtors, etc. create/comment on lists of the type that say “most affordable in the US” or similar. Compared to what? It’s a nice little town, but just because it’s cheap to an out of state investor, doesn’t make it cheap. Yet, when prices might go down, all real estate is local.
Qupie!
A couple we know recently had to take their dog to the vet for emergency surgery. They “own” a $450K home, two brand-new $40K plus vehicles, a hot tub etc, but didn’t have enough in their checking account to pay the $1100 vet bill. I was floored.
I’m overjoyed to see the return of a minimum of 5% down, knowing that simple requirement will knock about 3/4 of the would-be buyers out of contention when I’m ready to go home-shopping. I’ll be even happier when 20% down becomes mandatory, plus solid credit and verifiable income. Roll on, credit crisis!! As one of the very few zero-debt, high-downpayment, six-figure-income buyers left on the field, the housing market will be my oyster and I’ll have desperate sellers and realtors eating out of my hand.
Good grief! My sympathy is with the animal. I actually have a separate savings account for the animals for up to $12,000 in vet bills. (Relying upon a Service Dog means they get very high priority.)
Now we were away this summer for a few days - about 400 miles from home - and had trouble with the car. The repair bill ended up being over $1K on the estimate and the repair shop wanted cash or a debit/credit card since we were from out of state. Not using credit cards (cut them up 20 years ago), I simply picked up the phone and called my bank and it went like this:
Me: Hi Joan, its Ann Scott
Her: How is the trip? Will you be home tomorrow?
Me: Problem with the car and it is in the shop
Her: How much do you want moved into checking?
Me: Transfer $2K to be safe
Her: Okay Hold on…
Me: How long before it is in?
Her: Its done - I was typing as we talked and ordered an instant credit to the account so you don’t have to wait until the next banking day.
Me: Thanks - with any luck we will be home day after tomorrow
Forgot to add, they’d maxed out their credit cards, so were forced to (gasp) come up with cash.
A girl I once dated made $65k/yr. in CRE. She had to send her dog to live with a sibling because of a move. She didn’t have $50 to ship the dog.
Even homeowners around here don’t have too much spare $ for the essentials for living in Chicago. Last week we got hit with a foot of heavy wet snow, with a 6 foot pile at the end of the driveway. They are out with shovels! OMG you can’t swing $800 for a snowblower? By the way it’s a warm +1 degrees here
We are across ‘The Lake’ and north of you on the eastern shore of Lake Michigan.
Don’t own a snowblower but don’t shovel either. It is called ‘pickup with blow’, ‘neighbor who is contractor and plows all the private roads and business lots in town’ and ’said neighbor is fond of me and won’t let me give him more than $10 for gas when he swings in, plows us out and goes down the street to his house.’
Of course, you may not believe this but we have LESS snow that Chicago-land. We used to live in Wadsworth out in Lake County.
Good for the shovelers, I say. Need to work off some of that midwest insulation. $800 for a snowblower sounds like some snowblower, does it make espresso too?
I remember when only “rich” people lived in 400-500K houses and drove MB’s and BMW’s. Surgeons, business owners, executives, senior partners in reputable law and accounting firms. Not J6Ps working in non management jobs.
This week is the Chicago Auto Show.
My first visit was in 1978. That year, tucked far in a corner, was a North Shore dealership with a sampling of MB, BMW, Jags, etc. They were treated as novelties then - not much unlike replicas of the Mach 5 or the Batmobile.
Go to the show in any recent year and you’ll see all the luxury brands have their own section. The HELOC Joes and Janes file through the models with kiddies in tow. They aren’t dressed particularly well, lots of clothes with sports insignia from gaudy designers. Many bought, but can they keep it up?
I guess beamers and benzes were trendy earlier on in SoCal. They certainly weren’t novelties in the late 70’s.
Same here. When this market bottoms out, only rich people will be in $500k houses that they actually own. Ill be in a $50k or cheaper house but it’s good enough for me
The overwhelming majority of Americans (and Brits I suspect) are living from pay check to pay check. Most have been soft brain washed by government and media (remember George W. Bush and his phrase “Go and buy something”) into spending and spending and spending, using credit cards, using property as an ATM, buying everything on credit.
It was a minor Ponzi scheme in the past which could be controlled but in the last 20 to 30 years it’s become a massive Ponzi scheme.
That’s the reason we are not being told the true facts concerning our financial system. That’s why banks are hiding (for as long as they can) the real extent of their losses because of sub-prime. It did work quite well for the banks and Wall Street and the corporations for the last 30 years. The whole system was being held up by a massive dam, holding back and hiding what was going on behind the 7′ thick wall of concrete.
Then came the perfect storm or Murphy’s Law. Mr. Magoo Greenspan arrived with his free money, if you can prove you have a pulse. Onto the scene came George W. Bush with his deficits don’t matter crap and promptly increased the deficit by trillions of dollars which even our children cannot pay back. Because of their actions, Greenspan and Bush gave the all clear to slick Wall Street operators who invented financial instruments nobody understood. All of this was aided and abetted by a grossly manipulated Fed who are controlled by Wall Street (if you think they are independant you need to get your drinking water checked out) who printed money on an “as needed” basis and is STILL printing money on an “as needed” basis. Throw in a banking system which is now based on pure greed as opposed to a reasonable return on money, and we are starting to see some nasty cracks appearing everywhere in the dam.
At the moment, the government and the Fed are simply plugging one crack, then rushing to plug another crack, then another. This government give-back of $600 to $1,200 of your tax money being a classic example. It will not work because most of that money will be spent on paying energy bills and inflated food bills. Not on buying 52″ tv’s and trips to Disneyland.
However, the Washington whores are just not able to plug all the cracks. Truth is, the dam was built on a bad foundation. End result. Not good. If this recession turns out to be a serious downturn and, I might add, many of those who predicted the property bust say it will be, we now have a population where the majority haven’t got “a pot to piss in” by way of savings, if they have to weather the storm. If they get laid off they haven’t even got next month’s mortgage payment. Their health insurance is gone. Their car payments are not there.
The odds are we are looking at some very bad times up ahead. Consumers tapped out money and credit-wise. Look for massive lay-offs up ahead. We are living in a country which has lost much of it’s “blue collar” industries which helped create a giant middle class which is fast being decimated. Property prices are still at least 50% over priced in most places. In the highly populated areas even more over priced. We could see massive foreclosures way beyond what we are seeing now, a slew of big box builder bankruptcies up ahead, a health care system groaning under the strain because people cannot afford to pay for insurance. Sadly, the US hasn’t even got the basic foundation of a health service like europe. It could get worse. It seems the plan is, to hand the management of a national health service over to the big corporate insurance companies as opposed to the government managing it. Does the average American understand what that means? These big insurance companies will ream the system a new a*shole if they get to manage it. Remember the crap about “private accounts” on Wall Street for Social Security instead of government accounts. Bush and Wall Street Godfather Paulson are still pushing it. Looked at your 401k’s lately? Anything handed over to Wall Street in the form of “private accounts” is just another treasure chest they can steal from. Once Wall Street or the big corporations get control of ANYTHING, you can bet your bottom dollar Joe Sixpack will lose.
BTW, the new word for recession is slow growth
Cinch
“Panic” was the word used to describe a downturn until the Panic of 1907. That downturn was especially nasty and tainted this P word, so it was decided the word “depression” would be used instead.
Then the devastating Great Depression arrived and tainted the D word.
Now we use the word “recession”; I suspect after this economic downturn another word will take its place.
(A good word to use would be “re-education”, IMO.)
“correction” is already the new euphemism for “decline”.
Now we use the word “recession”; I suspect after this economic downturn another word will take its place.
True. And this word will be in Chinese.
“And this word will be in Chinese.”
LOL. And this Chinese word will mean “gift”.
It will not work because most of that money will be spent on paying energy bills and inflated food bills. Not on buying 52″ tv’s and trips to Disneyland.
Actually, I am planning on spending our $1800 on a trip to Disneyland! Of course, we already have annual passes and we definitely WON’T be staying at one of Disney’s overpriced hotels. There are plenty of perfectly good motels within walking distance. And if I’m feeling upscale I would probably stay someplace like the Embassy Suites.
Is it true the banks can allow FB’s to refinance the principle or have a short sale to one’s self? Ive read a few ancedotals and this has me worried. If true, it will keep prices inflated.
I need more comments regarding this. Some of you are saying this indeed is possible. If so, why walk away when you can simply short sale to yourself over and over all the way to the bottom?
Yes. Bankers are going to figure out that it’s better to take a 20% loss on a debt foregiveness than a 30%+ loss on a foreclosure. Until accounting rules are changed only the best capitalized banks will be able to take the loss from extensive debt foregiveness. Most banks will still choose to foreclose and hide the loss with a BS appraisal.
Isn’t debts forgiven taxable on a 1099?
In December the govt. passed a law forgiving the tax on forgiven debt involving your primary residence. Effective for 2007 and 2008.
“‘We are missing an opportunity to slow down the depreciation we are facing. You have a lot of people who would buy right now because the prices are declining,’ said Drew Sygit, a certified mortgage and equity planner in Bloomfield Hills. ‘They know it’s a great time to buy, but they don’t have the money.’”
Duh! That’s a big reason why house prices became so high! 5% down isn’t enough, I expect to see at least 20% down near the bottom
I’m glad we are missing this opportunity to slow down depreciation. Don’t you?
How can you be a certified equity planner and give this mindless opinion?
Life for credit card junkies gets 28% more interesting
A Credit Card You Want to Toss
Credit-card issuers have drawn fire for jacking up interest rates on cardholders who aren’t behind on payments, but whose credit score has fallen for another reason. Now, some consumers complain, Bank of America is hiking rates based on no apparent deterioration in their credit scores at all.
The major credit-card lender in mid-January sent letters notifying some responsible cardholders that it would more than double their rates to as high as 28%, without giving an explanation for the increase, according to copies of five letters obtained by BusinessWeek. Fine print at the end of the letter — headed “Important Amendment to Your Credit Card Agreement” — advised calling an 800-number for the reason, but consumers who called say they were unable to get a clear answer. “No one could give me an explanation,” says Eric Fresch, a Huron (Ohio) engineer who is on time with his Bank of America card payments and knows of no decline in the status of his overall credit.
http://biz.yahoo.com/bizwk/080207/feb2008db2008026105146.html?.v=1&.pf=banking-budgeting
Might wanna switch to debit card or simply pay in cash like I do…
Waitress at our table last night (at the oddly-empty J6P/E3-E5/GenX&Y bar) even mentioned the BOA letter. I said, “it’s a Minsky moment”, and received blank stares from around the table (they all have paid top dollar for their SFH and I just left it at that, we got up to shoot pool and check out the cuties).
Last year Bank of America offered credit cards to residents of Los Angeles County who only had ITIN numbers and who had neither a social security number or a credit history, i.e. illegal immigrants. Wonder how many of their new “cardholders” ran up big bills, then scampered off to Mexico. I shredded my BoA card (after telling a customer service rep why I refused to deal with such a slime-ball outfit). To all the people howling about yet another outrage from BoA, here’s a suggestion: stop whining and cut up your card. Oh wait, you’ve maxed it out - too bad for you. How’s that 28% working out for you?
No problems here! I haven’t payed one $ of interest in 10 years. Buy new auto toys with cash, … It is going to kill the turds who depend on plastic for their “saving” account.
I was speaking on the phone with an ex-used home salesperson the other day. He left the Clearwater, FL business after 30 years of being in it to pursue some hobby-like vocation. He volunteered info without me prompting a word from him on it. He sounded disgusted and not at all glowing about things are different there. Curiously, when I asked him if the acceptable income to price ratio was what was being regressed to, he waffled and said nothing about it. Bing bing bing! First rule of REIC Club is not to talk about past performance in any truthful way.
And they’ve been paying for both homes since September. ‘It’s not fun,’ Wendorf said with a wry chuckle. ‘You’re working your tail off to pay two mortgages, and you have nothing to show for it.’
You can show your tail. Doensn’t mean any of us want to see it. I am sure it is NOT a pretty sight. LOL.
Don’t put all your eggs in one basket. And don’t agree to buy a second house, until the first one is SOLD and the check for it is cleared (so it doesn’t fall through).
“Since then, they’ve … dropped their asking price from $324,900 to $294,900 without receiving a single offer on the eight-year-old, 2,600-square-foot home on the southwest side.”
“Wendorf …plan[s] to put it back on the market this month as a FSBO (for sale by owner) at $273,000.”
Ummm…new paint and fresh paint is certainly worth that much more than the $192,400 purchase price.
Besides, why should I buy that when the builder is still putting up homes for less than that, throwing in finished basements, offering no mortgage payments for six months.
I don’t understand why he won’t go back to his previous realtor (http://www.myhowardrealty.com”) …he states on his website, if he doesn’t sell it in 39 days he’ll sell it for free…..drop the price
When will the seller finally *get it*? People can’t afford homes at these prices. People don’t have savings so they can’t come up with downpayments. People are in debt. People include renters AND owners.
If you don’t need to or want to sell, then you can pretend your house is worth whatever you want. Live in a two bedroom flea-trap? Call it a mansion and claim it’s worth a million bucks.
If you need to sell, then call it a starter home and sell it at a starter home price of $75-100k. Yes, that low. Starter homes are for families earning $30-40k a year. They can afford no more than $100k.
It is going to get worse and worse. Or, if you are like me (debt-free, cash rich), better and better.
House prices are going to drop another thirty to forty percent from here for a total of about fifty percent from the peak, more in some areas like Las Vegas and Socal.
If you need to sell, sell now. Hit the bids and laugh at the sucker who bought your house.
‘You have a lot of people who would buy right now because the prices are declining,’ said Drew Sygit, a certified mortgage…
No surprise that statement is from a mortgage broker. Imagine it coming from a stock broker.